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India’s Ambitious Plan For Doubling Its Refinery Capacity
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Splitting Gas Transportation & Marketing Major GAIL
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IOC Reports GRM Of $ 8.8 Per Barrel, Doubles Profit
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Press Release [FREE Access]
Petro Intelligence » Putin’s Great Game: A Gas Pipeline To India

by R. Sasankan

Vladimir Putin, the strongman of Russia, has started to put in place his pieces on a chequerboard that brings back memories of The Great Game that was played out in Central Asia with the objective of wresting control of that jewel in the Crown: India.

The Great Game encapsulated the intense rivalry between the British and Czarist Russian Empires over parts of Central Asia, starting from the early 19th century and stretching all the way up to the early years of the 20th century.

Vladimir PutinThe clash of the empires solidified along the front lines between the two dominant empires that ran through Afghanistan and Persia.

Britain is now a shadow of the powerful regime it once was. But Russia – weakened as a super power after the collapse of the Soviet Union in the early nineties – has started to re-establish its role in the region.

The new Great Game is being played out in the new sphere of geopolitics: gas pipelines.

Oil and gas are Russia’s lifeline that the west has been trying to choke off. But Russian President Putin has now started to put in place some clever business deals that will eventually turn it into a big and strong player in one of the world’s most lucrative energy consuming markets: India.

Putin first reached out to China and signed up a huge gas deal. He then persuaded his country’s Rosneft to acquire Essar Oil’s 20 million tonne refinery in India. Now, Russia is financing the construction of a pipeline to supply gas to Pakistan which has never been known to be friendly to Russia.

Hassan RouhaniPutin’s Russia has no political ideology as such. The erstwhile Soviet Union was a communist country but it fell out with communist China over the issue of who should be the leader of the communist world after Joseph Stalin. That honour should legitimately have gone to Mao but Nikita Krushchev was not willing to concede. This is a detail in history that the present leaders of Russia and China are not interested in. China is in a hurry to reach the top and Russia is obsessed with battling the west, which has been trying to isolate it through sanctions.

India is the market that holds the greatest mystique for all oil and gas producers: its allure magnified by its ever-burgeoning need for fuel to power what could become the fastest-growing economies in the world, matching the economic dynamism of China. But the road to India must pass through key areas of Central Asia – reviving talk about a new chapter in the Great Game.

After the acquisition of Essar Oil, Putin did not immediately crank up plans to sell gas to India. Instead, he opted to open up a route via Pakistan which is considered extremely hostile to India. Pakistan is not a big gas market nor can it be expected to pay for the gas. But that pipeline could be the way to reach India’s vast market — and that is part of Putin’s deliberate strategy. (Putin is believed to have directly intervened when Saudi Aramco tried to scuttle Rosneft’s initial deal for Essar Oil’s refinery)

How can India buy gas from a pipeline which comes through Pakistan? India practically abandoned the proposed Iran-Pakistan-India (IPI) gas pipeline citing security reasons. But the very same India became a party to the proposed Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. What explains this apparent double standard? The reason is simple: The US did not want India to be a partner in the IPI pipeline project and this is understood to have been one of the informal conditions which helped India to obtain US approval for its nuclear status during George Bush’s presidency.

D.K. SarrafWhat Putin is trying to sell to India is not gas from Russia but Russian-owned gas from Iran. How does Russia own gas in Iran? A few months ago, this column broke the news that representatives of Russian companies were trying to get refineries to process Iranian crude. During the period of US-led sanctions, Iran depended on Russia for many things for which the dollar-starved Iran paid in oil. Russian companies were trying to get this crude refined in Asia or Europe and sell the products instead of crude so that they could maximise profits.

Similarly, Iran entrusted development of some of the gas fields to Russia. The identity of these fields is not known. Here again, Russia is not paid in dollars but granted a share in the total gas reserves developed. Russian companies have been wrestling with the problem of trying to market this gas. Here again the real marketing man is Putin. He knows that India shied away from IPI pipeline under pressure from the US. It will be eminently attractive for India to buy gas which reaches the border with Pakistan. There is certainly a security angle which can be easily taken care of. There are no powerful domestic gas producers to lobby against the Russian-supplied gas. In the Russian scheme of things, the first priority is to complete the pipeline to Pakistan from Iran. But the ultimate target is the Indian market.

Once the Russian-owned Iran gas reaches India, the same pipeline can be expanded later to supply gas that Iran wants to market. If India plays its card well without falling under the spell of the different gas lobbies that have become over active these days, the country can get gas at the most competitive rates. But the reality is that India is a fertile place for lobbies. Qatar, which meets India’s LNG requirement at present, may come under pressure to lower its rates. And so will other suppliers. Almost simultaneously, Russia will also back an offshore pipeline project to India to transport gas from Iran.

Nothing can be ruled out in international relation. Iran-India relations, which have become slightly frosty these days following the clash over the contract to develop the Farzad B field which Indian PSUs discovered, may take a turn for the better. Industry circles see the possibility of Russian companies involved in developing gas fields in Iran roping in Indian PSUs into their work. This is in the common interest of Russia and Iran both of which need to grab a slice of the Indian market.

India consumes a lot of oil but not so much gas. That situation could change if Russia and Iran persuade India to buy the gas they are marketing. India benefits from such an arrangement as it will find a way to use cheap fuel to pump prime its economy. After all, the price of fuel is important for a market like India.



To download the latest issue 'Volume 24 Issue 21 - February 10, 2018', click here
Petro Intelligence [FREE Access]
Terminal Illness: Castles Built On Hot Air
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The Great Game: Pakistan Becomes The Cat’s Paw
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Putin’s Great Game: A Gas Pipeline To India
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ONGC: More Sinned Against….
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Foreign Investment
RIL, BP To Acquire Niko’s 10% Stake In Gas Block
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RIL-BP JV To Start Selling Imported LNG In 12-18 Months
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Overseas Investment
Returns From Mozambique Investment To Be Delayed
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Gas Scene
PNG Status As On October 1, 2017
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CNG activities in India as on 1st October, 2017
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Gas Sector Growth - China and India
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Gas share in Energy-Mix India
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Gas Share in Energy in select countries
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Domestic Gas Prices in recent months
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Domestic Natural Gas Scene In December 2017
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Sector-wise Consumption of Natural Gas in November 2017
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List Of Importers & Source-Wise LNG Imports In November 2017
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Gas pipelines under execution / construction as on 1st November, 2017
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Capacity Utilisation of Gas Pipeline Network as on 1st October, 2017
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Status of Coal Bed Methane Gas development in India (Sept 2017)
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Status of Shale Gas and oil development in India
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Sectoral Consumption of gas in October 2017, far below demand projections
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LNG Imports and Domestic Gross Natural Gas Production In October 2017
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Update: CNG Stations & Vehicles and CNG Sales
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Update: CGD Factsheet as of September 2017
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Domestic Gas Price (November 2014 -March 2015 to October 2017 - March 2018)
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Source-Wise LNG Imports In September 2017
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ONGC Asset-wise gas flaring in FY 2016-17
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
LPG Profile For Period April-December 2017
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Industry marketing infrastructure as on 1st October, 2017
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HPCL: Infrastructure & Capacity Expansion Projects
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Impact of Petroleum Prices On CPI & WPI
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Fuel & Loss
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Month–wise price in Indian crude basket
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Power deficit: Region-wise position for December, 2017
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India’s Crude Imports From OPEC Countries Registers Further Decline In December 2017
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HPCL’s unique position in India’s oil industry
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Total reserves of ONGC group as on April 1, 2017
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End-Use Sectors of High Speed Diesel
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IOC’s Unparalleled Cross -Country Pipeline Network, Market Share, Throughput and Capacity Utilisation
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Petroleum products demand & Gross Domestic Product (GDP) during five year period
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Retail Selling Prices of Petrol and Diesel: India vis-a-vis Developed Countries
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Status of blocks under NELP (2017-18)
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Petroleum Sector’s Contributions To States Through Taxes
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Revenue from the Petroleum Sector and Payout from Government for petroleum subsidy
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Important terms in pricing of petroleum products
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India’s Region-Wise Crude Imports in November 2017
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Retail Selling Price (RSP) of major products in India & neighbouring countries
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High Sulphur Crude Processing Hits An All Time High
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Oil India Ltd Cost Structure
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Specific energy consumption (MBN number) of PSU refineries
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Uptrend Stalled In Distillate Yield Of PSU Refineries
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Oil India Ltd : Large and Diversified Domestic Reserve Base
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Tenders [FREE Access]
Vedanta Limited
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